Gold & Silver Daily

Ed's Critical Reads

Jun 06, 2015

Where The May Jobs Were: Teachers, Waiters, Retail, and Temp Help

One of the defining features of jobs "recovery" and the main reason why wage growth has been so far below the Fed's expectations for years it has prevented wage inflation from appearing despite years of QE, is that the quality of jobs added month after month has disappointing. May was no difference.

Yes, the headline print of 280K job additions was great, but a quick look at how the BLS got there shows that nothing has changed because four of the five main job additions were, as usual for the lowest paid jobs.

Here is the breakdown:

  • Education and Health (i.e., teachers): +74,000
  • Leisure and Hospitality (i.e., waiters): +57,000
  • Retail Trade (i.e., minimum wage store clerks): +31,400
  • Temp Help: +20,100

In fact, these lowest quality jobs accounted for two-thirds of all jobs gains in May.

This brief Zero Hedge piece, with an excellent chart, appeared on their Internet site at 10:27 a.m. EDT yesterday morning---and its' courtesy of Dan Lazicki---and it's definitely worth a minute of your time.

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The Do-It-Yourself Economy Just Hired 1 Million American Entrepreneurs

Animal spirits are returning to the American workforce.

The number of self-employed workers surged by 370,000 in May, according to the U.S. Labor Department's survey of households released Friday. And nearly 1 million workers have gone to work for themselves since just February.

The report is the latest sign that entrepreneurial activity is on the rise. The number of business start-ups rose in 32 of the 50 U.S. states last year, the Kansas City, Missouri-based Kauffman Foundation reported Thursday. The Kauffman Index of Start-up Activity, which is an indicator of new business creation, had the biggest increase in the past two decades.

"It is evidence of a growing do-it-yourself economy," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ. "The market for self-employed workers is booming and this is a sign of a pickup in entrepreneurial activity."

Well, dear reader, a sentence further down in this story states---"There is reason for some caution in interpreting the data."---and that would be excellent advice if you read this.  This Bloomberg article was posted on their website at 10:07 a.m. Denver time yesterday morning---and it's the second offering in a row from Dan Lazicki.

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In 'year of Apple Pay', many top retailers remain skeptical

In a January earnings call with investors, Apple Inc Chief Executive Tim Cook made a confident prediction: "2015 will be the year of Apple Pay," he said.

Since then, the company has aggressively courted retailers - and claimed significant success. "We've spoken to all of the top 100 merchants in the U.S., and about half will accept Apple Pay this year, with many more the following year," a company spokesperson recently told Reuters.

But interviews with analysts, merchants and others suggest that Apple's forecast may be too optimistic and that many retailers remain skeptical about the payment system.

This longish, but very interesting story appeared on the Reuters website at 7:34 a.m. EDT on Friday morning---and I thank Orlando, Florida reader Dennis Mong for finding it for us.

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Economic Crisis 2015 - Peter Schiff & Mike Maloney

Recently Peter Schiff visited Mike Maloney in California. During his stay they filmed nearly 3 hours of discussions about gold, silver, freedom, and the economy in general.

Dan Rubock over at GoldSilver.com sent me this 41:39 minute video interview on Tuesday, but for length reasons it had to wait for my Saturday column.  It's definitely worth your time if you have it.

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Delusionary Thinking in Washington: The Desperate Plight of a Declining Superpower

Take a look around the world and it’s hard not to conclude that the United States is a superpower in decline. Whether in Europe, Asia, or the Middle East, aspiring powers are flexing their muscles, ignoring Washington’s dictates, or actively combating them. Russia refuses to curtail its support for armed separatists in Ukraine; China refuses to abandon its base-building endeavors in the South China Sea; Saudi Arabia refuses to endorse the U.S.-brokered nuclear deal with Iran; the Islamic State movement (ISIS) refuses to capitulate in the face of U.S. air power. What is a declining superpower supposed to do in the face of such defiance?

This is no small matter. For decades, being a superpower has been the defining characteristic of American identity. The embrace of global supremacy began after World War II when the United States assumed responsibility for resisting Soviet expansionism around the world; it persisted through the Cold War era and only grew after the implosion of the Soviet Union, when the U.S. assumed sole responsibility for combating a whole new array of international threats. As General Colin Powell famously exclaimed in the final days of the Soviet era, “We have to put a shingle outside our door saying, ‘Superpower Lives Here,’ no matter what the Soviets do, even if they evacuate from Eastern Europe.”

Strategically, in the Cold War years, Washington’s power brokers assumed that there would always be two superpowers perpetually battling for world dominance.  In the wake of the utterly unexpected Soviet collapse, American strategists began to envision a world of just one, of a “sole superpower” (aka Rome on the Potomac). In line with this new outlook, the administration of George H.W. Bush soon adopted a long-range plan intended to preserve that status indefinitely. Known as the Defense Planning Guidance for Fiscal Years 1994-99, it declared: “Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union.”

This longish essay certainly falls into the absolute must read category for any serious student of the New Great Game---and it appeared on the tomdispatch.com Internet site a week ago Friday.  I thank reader M.A. for sending it our way on Monday---and for obvious reasons it had to wait for today's column.

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Edward Snowden: The World Says No to Surveillance

Two years ago today, three journalists and I worked nervously in a Hong Kong hotel room, waiting to see how the world would react to the revelation that the National Security Agency had been making records of nearly every phone call in the United States. In the days that followed, those journalists and others published documents revealing that democratic governments had been monitoring the private activities of ordinary citizens who had done nothing wrong.

Within days, the United States government responded by bringing charges against me under World War I-era espionage laws. The journalists were advised by lawyers that they risked arrest or subpoena if they returned to the United States. Politicians raced to condemn our efforts as un-American, even treasonous.

Privately, there were moments when I worried that we might have put our privileged lives at risk for nothing — that the public would react with indifference, or practiced cynicism, to the revelations.

Never have I been so grateful to have been so wrong.

This rather brief opinion piece by Edward, filed from Moscow, showed up on the 'hallowed' pages of The New York Times on Thursday---and it's the first offering of the day from Roy Stephens.  It's certainly worth reading.

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Canada warns Russia it won't rejoin G7 with Putin in power

Canadian PM Stephen Harper has pledged to “strongly oppose” Russia rejoining the Group of Seven nations as long as Vladimir Putin is president. The G7 suspended Moscow last year over the conflict in Ukraine, but hasn't ruled out allowing it back.

"I don't think Russia under Vladimir Putin belongs in the G7. Period," Harper said in an exclusive interview with AP ahead of his trip to Ukraine and the G7 meeting in Bavaria this week. "Canada would very, very strongly oppose Putin ever sitting around that table again. It would require consensus to bring Russia back and that consensus will just not happen."

According to Harper, who faces re-election in October, Moscow is hard to get on with.

It's always embarrassing to have to keep apologizing in public that the leader of your country is a flaming ***hole, but that's certainly the case once again here.  I know that the Canadian people will do what's necessary to ensure that this man is put out to pasture for good in October---and that's spoken by a dyed-in-the wool small 'c' conservative, me!  I thank reader Jule Mounteer for bringing this story to my attention---and now to yours.

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G7 Experiencing a 'Crisis of Legitimacy' as Leaders Accused of Hypocrisy

The G7 summit has been accused of suffering from a "crisis of legitimacy" ahead of the opening of Sunday's event in Germany, with leaders criticized for their perceived lack of action when it comes to pledges on improving global inequality, reducing climate change and implementing trade deals.

As the leaders of the U.S., U.K., Germany, France, Italy, Canada and Japan prepare to discuss a range of issues such as global food security and climate change in Bavaria's Elmau Castle, critics have slammed the G7 concept, accusing it of representing the height of hypocrisy.

"The very concept that seven of the richest nations have a mandate to enact policies and programs that impact the rest of the world is in itself a gross and unjust anachronism," Nick Dearden, director of U.K.-based activist group Global Justice Now said.

While much of the criticism of this year's G7 event has centered on Russia's non-attendance at the Bavarian summit, Dearden says the leaders of the countries involved talks are not matching their words with their actions.

This sputniknews.com article was posted on their website at 6:55 p.m. Moscow time on their Friday evening---and it's the second contribution of the day from Roy Stephens.

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Greece cannot accept lenders' latest proposal: economy minister

Greece cannot accept the latest proposals for a cash-for-reforms deal put on the table by its international lenders but was prepared to negotiate a compromise, Greek Economy Minister George Stathakis said on Friday.

Greece delayed a key debt payment to the International Monetary Fund due on Friday as Prime Minister Alexis Tsipras demanded changes to tough terms from international creditors for aid to stave off default.

Stathakis said Greece had the money to pay, but had accepted an offer from the IMF to bundle four payments due in June into a single €1.6 billion lump sum due at the end of the month.

"We are looking forward to getting a deal as soon as possible," he told BBC Radio, but said that while Greece was ready to discuss compromises, it would not accept proposed fiscal adjustments for 2015 and 2016.

This Reuters article, filed from London, appeared on their website at 6:06 a.m. yesterday morning EDT---and it's the second contribution of the day from Dennis Mong.

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Greece's creditors need a dose of reality – this is no time for European disunion -- Joseph Stiglitz

E.U. leaders continue to play a game of brinkmanship with the Greek government. Athens has met its creditors’ demands more than halfway. Yet Germany and Greece’s other creditors continue to demand that the country sign on to a programme proven to be a failure, and that few economists ever thought could, would, or should be implemented.

The swing in Greece’s fiscal position from a large primary deficit to a surplus was almost unprecedented, but the demand that the country achieve a primary surplus of 4.5% of GDP was unconscionable. Unfortunately, at the time that the “troika” – the European commission, the European Central Bank and the International Monetary Fund – first included this irresponsible demand in the international financial programme for Greece, the country’s authorities had no choice but to accede to it.

The folly of continuing to pursue this programme is particularly acute, given the 25% decline in GDP that Greece has endured since the beginning of the crisis. The troika badly misjudged the macroeconomic effects of the programme they imposed. According to their published forecasts, they believed that, by cutting wages and accepting other austerity measures, Greek exports would increase and the economy would quickly return to growth. They also believed that the first debt restructuring would lead to debt sustainability.

This op-ed piece by Stiglitz was posted on theguardian.com Internet site at 1:40 p.m. BST London time---and I thank South African reader B.V. for sharing it with us.  It's worth reading.

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IMF has betrayed its mission in Greece, captive to EMU creditors

The International Monetary Fund is in very serious trouble. Events have reached a point in Greece where the Fund's own credibility and long-term survival are at stake.

The Greeks are not withholding a €300m payment to the IMF because they have run out of money, though they soon will do.

Five key players in the radical-Left Syriza movement – meeting in the Maximus Mansion in Athens yesterday – took an ice-cold, calculated, and carefully-considered decision not to pay.

They knew exactly what they were doing. The IMF’s Christine Lagarde was caught badly off guard. Staff officials in Washington were stunned.

On one level, the “bundling” of €1.6bn of payments due to the IMF in June is just a technical shuffle, albeit invoking a procedure last used by Zambia for different reasons in the 1980s. In reality it is a warning shot, and a dangerous escalation for all parties.

This longish, but must read commentary by Ambrose Evans-Pritchard put in an appearance on the telegraph.co.uk Internet site at 3:25 p.m. BST yesterday afternoon, which was 10:25 a.m. EDT in Washington.  It's the third offering of the day from Roy Stephens.

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Greek Banks on Verge of Total Collapse: Bank Run Surges "Massively" as Depositors Yank €700 Million Today Alone

While the Greek government believes it may have won the battle, if not the war with Europe, the reality is that every additional day in which Athens does not have a funding backstop, be it the ECB (or the BRIC bank), is a day which brings the local banking system to total collapse.

As a reminder, Greek banks already depends on the ECB for some €80.7 billion in Emergency Liquidity Assistance which was about 60% of total deposits in the Greek financial system as of April 30. In other words, they are woefully insolvent and only the day to day generosity of the ECB prevents a roughly 40% forced "bail in" deposit haircut a la Cyprus.

The problem is that a Greek deposit number as of a month and a half ago is hopefully inaccurate. It is also the biggest problem for Greece, which has been desperate to prevent an all out panic among those who still have money in the banking system.

This Zero Hedge commentary showed up on their website at 2:49 p.m. EDT on Friday afternoon---and I thank reader 'David in California' for passing it around.

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Putin holds phone call with Tsipras, agrees to meet in 2 weeks in Russia

Russian President Vladimir Putin has held a telephone talk with Greek Prime Minister Alexis Tsipras on Friday. They have discussed Russian gas supplies via Turkish Stream and agreed to meet at the St. Petersburg International Economic Forum in mid-June.

"Practical steps were discussed to implement agreements reached during the recent working visit of Alexis Tsipras to Russia, particularly the planned construction of the gas transport infrastructure across the territory of Turkey and Greece," the press service said.

The talks with the Russian president came hours before the Greek prime minister is due to address the country's parliament about the EU proposal.

The Russian and Greek leaders have recently stepped up contacts, especially regarding the Turkish Stream gas pipeline. It is planned for the pipeline to transport 47 billion cubic meters of Russian natural gas to the Turkish-Greek border.

This news item appeared on the Russia Today website at 10:32 a.m. Moscow time on their Friday morning, which was 3:32 a.m. EDT in Washington.  It's another contribution from Roy Stephens.

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Soros Flaring Flames of Ukraine War to Force Regime Change in Russia

A leaked document attributed to investor George Soros outlines the billionaire's plan for Ukraine, which essentially boils down to an ambitious idea to use Kiev to topple Russian President Vladimir Putin, investigative historian Eric Zuesse said.

The confidential document, allegedly part of communications between Soros and Ukrainian authorities, was published by hacktivists from CyberBerkut, known for releasing embarrassing revelations with regard to the U.S. meddling in Ukraine.

"While it would be more desirable to have Russia as a partner than an enemy, that is impossible as long as Putin persists in his current policies," Zuesse quoted Soros as saying. In other words, Moscow should be a partner but Russian leader has to go, the historian said referring to Soros' stance.

This is not 'new' news, as I've posted something about this before---and the story from other sources has been floating around for about a month.  This iteration appeared on the sputniknews.com Internet site at 2:56 p.m. Moscow time yesterday afternoon---and I thank U.K. reader Tariq Khan for sending it our way.

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Poroshenko Hands Over Roshen Share to Rothschild Under Trust Deal

Ukrainian President Petro Poroshenko confirmed on Friday his decision to sell his businesses and transfer his stake in the Roshen confectionary corporation under a trust agreement to Rothschild Investment Company.

“I signed a deal with the world-famous and the world’s best Rothschild Company, which is now looking for buyers. Three such potential buyers have already stepped forward and are analyzing the company’s legal status and financial performance,” Poroshenko said during a news briefing devoted to his annual address to parliament.

“The transfer will be done so that my name is not mentioned among Roshen’s owners,” Poroshenko added.

One of the world’s main confectionery producers, Roshen Corporation annually turns out around 450,000 tons of chocolate and jelly sweets, caramel, chocolate, biscuits, waffles, and cakes.

This is another story from the sputniknews.com website---and it's also courtesy of Tariq Khan.  It was posted on their Internet site at 5:07 p.m. Moscow time on their Friday afternoon, which was 10:07 a.m. in New York.

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John Batchelor interviews Stephen F. Cohen

From FIFA to George Soros the Ukraine is turning into a melting pot of personalities and  hot spots of intrigue. John Batchelor and Stephen F. Cohen once more discuss the most serious news of this new Cold War.

On the Russia Washington front Senator John McCain and the usual suspects rev up the rhetoric against the corruption in FIFA and targets for vandalism the World Cup games for Moscow in 2018. Cohen notes that once more International games institutions are being politicised by Washington as a campaign to take this event from Russia, and it sets a precedent for a new and most inappropriate front for politics.

Then there is the very strange story of Mikhail Saakashvili, former president of Georgia becoming governor of the province of Odessa in Ukraine. He is now under indictment for various crimes in Georgia while in office there, and most importantly he was responsible for the 2008 Georgia War against Russia – as Washington’s man behind the hostilities. Cohen describes his history at length and refers to his appointment as “weird” and a “detonator” for problems ahead in the Ukrainian Civil War. He is a long term Russian hater who is to be governor of a province that is culturally like the Donbass- in a word Russian. And in Russia many Russians see Odessa as more part of Russia than Ukraine – similar to Crimea. Cohen thus considers Saakashvili a “time bomb” and a “provocation”.

There is much more in this broadcast as Cohen gives great context to comparing the ending of the Soviet Union under Gorbekev and the political realities of the new Russia under Putin. As usual the insights gained about Russia are not available anywhere else, and all of these broadcasts are important for those who follow the New Great Game.

Reader Ken Hurt was the first person through the door with this on Wednesday, but the entire preamble above is courtesy of Larry Galearis.  This 39:48 minute audio interview was posted on the johnbatchelorshow.com Internet site on Tuesday.

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Sergey Lavrov interview on Bloomberg TV

This 24:20 minute video interview with Sergey showed up on thesaker.is Internet site back on June 3---and I'm not sure of the exact date of the Bloomberg interview, but it's most likely less than a week old.

I haven't watched it yet, but it's on my 'to do' list this weekend.  Roy Stephens sent it to me on Wednesday---and it's another one of those news items that had to wait for the weekend.

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Russia’s largest bank issues first credit guarantees in yuan

Sberbank has issued its first yuan-denominated letters of credit that involve funding from the Export-Import Bank of China to Russia’s largest pharmaceutical company.

Pharmasyntez, Russia’s leading drug manufacturer, appealed to Sberbank with a request for funding credit guarantees in Chinese national currency as part of contracts for the supply of imported pharmaceutical products worth over 29 million yuan ($4.6 million), Sberbank said in a statement Friday.

Sberbank has become the first Russian bank to issue letters of credit in yuan; the decision was announced in November 2014.

“The development of cooperation with The Export-Import Bank of China expands Sberbank’s possibilities to finance clients’ foreign trade with Chinese counterparties.”

This story appeared on the Russia Today website at 5:02 p.m. Moscow time on their Friday afternoon---and I thank Roy S. for sharing it with us.

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Media failure on Russia's official gold reserves -- Koos Jansen

Gold researcher and GATA consultant Koos Jansen corrects a news agency report this week that grossly exaggerated Russia's gold reserves.

His commentary is headlined "Media Failure on Russia's Official Gold Reserves" and it was posted on the Singapore-based website bullionstar.com yesterday.  I thank Chris Powell for providing the above two paragraphs of introduction---and it's definitely worth reading.

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China’s five year plan---and the end of an era: Alasdair Macleod

China is in the late stages of constructing its thirteenth five-year plan, a process that commenced over a year ago and will result in a first draft in October. While the bulk of the plan will concern regional and domestic development, it is the international aspects that will concern the rest of the world. The plan, which will produce specific goals for 2016-20, is already having an effect on China's foreign and trade policy.

At its centre will be a shift of emphasis away from trade with the advanced nations, whose prospects are bound to subside towards their level of economic growth. Instead, to maintain the long-term objective of 7% growth in GDP China will turn her attention to improving Asia's infrastructure, a policy for which the building-blocks are now in place. The Silk Road Project is advancing from the drawing board, and the Chinese-led Asian Infrastructure Investment Bank (AIIB), which will arrange finance for projects totalling as much as $20 trillion over the next thirty years, was formally established this year.

Working in partnership with China through the Shanghai Cooperation Organisation (SCO) will be Russia, whose resources are central to Asia's modernisation. The SCO will eventually cover a territory from the Bering Strait to the Persian Gulf. To obtain extra resources, China has already established a dominant presence on the ground in Sub-Saharan Africa, secured the undivided attention of the Middle East by being its largest customer, and through its own diaspora can count on the cooperation of the South-East Asian nations currently in the West's sphere of influence. At the end of the thirteenth plan a substantial majority of the world's population will have become involved one way another.

The implications for the West are becoming apparent. We have already seen how Europe and Japan have clamoured to join the AIIB, despite their alliances with America. Unfortunately, America has been a Goliath to China's David: her mistake has been not to recognise the passing of her own era and embrace a future based on Asia.

This short, but must read article by Alasdair showed up on the goldmoney.com Internet site yesterday---and I thank Dan Lazicki for his final contribution to today's column.

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Gold for the long haul – Now is the time! -- Lawrence Williams

Over the long haul, gold is the least risky and potentially most rewarding of all investment asset classes.”  So says New York-based specialist gold analyst, Jeff Nichols, in his latest Nicholsongold newsletter.  Admittedly Nichols falls into the gold bull camp, but is at the realistic end of gold analysis, seeing both potential upsides and downsides ahead.  His latest article is headed Gold: Now is the time, and in it he lays out the various factors which he sees as having the potential to drive the gold price in the medium to long term – and as noted in the first sentence of this article he sees a reasonable investment in physical gold (not gold derivatives) – perhaps 5% – 10% of an investment portfolio – as key to protecting one’s assets over time.

So what factors does he point to as being the likely positive points for investment in gold?  In truth he is primarily stating the obvious here, but it’s an ‘obvious’ which is often ignored by mainstream investors who seek more rapid returns than gold tends to offer.  But rapid returns are themselves risky – it’s all very well chasing the stock markets upwards but as investors have found to their cost, bull markets tend to be followed by a crash and investors are notoriously bad at recognising when a crash begins and by the time they try to take their profits it is usually too late.

But some of the factors which could very easily come into play could have both an adverse impact on the general stock markets and a positive impact on gold.

Lawrie comments on a Jeff Nichols piece that was posted on the Internet early this week.  But Nichols conveniently forgets to mention the fact that black swans don't matter in a rigged market.  All that matters is what's happening in the COMEX futures market---and as I keep saying, until JPMorgan et al get the word, precious metal prices aren't going anywhere.

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Gold At $64,000 – Bloomberg’s ‘China Gold Price’

Bloomberg Intelligence suggest gold-backed yuan see gold at $64,000 per ounce
- “Chinese gold standard would need a rate 50 times bullion’s price”
- As China-U.S. relations deteriorate, gold-backed yuan possible
- Dollar and financial and monetary dominance of U.S. at risk
- U.S. and China war of words continues to escalate
- China rejects U.S. hegemony in Southeast Asia
- Currency war to escalate

If China were to partially back its yuan with gold it would require a gold price of $64,000 per ounce, 50 times gold bullion’s price today, according to a recent article from respected Bloomberg Intelligence.

It seems like an outlandish forecast. However, as tensions between the U.S. and China continue to escalate such a scenario is not actually as implausible as it may first appear.

This isn't the first time that I've seen such an outlandish gold price mentioned.  The first time was from blogger Adam Hamilton over a decade ago.  His number at the time was $51,000 the ounce.  This commentary by Mark O'Byrne was posted on the goldcore.com Internet site on Friday BST sometime---and it's certainly worth reading.  I would have found this story on my own, but Roy Stephens saved me the trouble---and I thank him for his last offering in today's column.

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Silver manipulation? First Majestic questions CFTC -- Lawrence Williams

There is a continuous debate taking place as to whether the principal precious metals prices are being manipulated by the big money for whatever reasons, or indeed in the case of gold at the instigation of some big Central Banks of which the US Fed is reckoned to be the main culprit. The idea is completely dismissed as complete rubbish by most mainstream gold analysts – indeed most will never mention the possibility. But activist groups like the Gold Anti Trust Action Committee (GATA) have researched, and put forward, some compelling evidence, dating back many years, which does indeed suggest that the monetary establishment has certainly been predisposed towards controlling the gold price as a runaway yellow metal price is seen as a destabilising influence on the global fiat currency system in terms of suggesting a global lack of confidence in paper money.

The jury remains out here – those who believe in gold price manipulation and repression will not be moved from their viewpoints, while the mainstream still looks upon these proponents as representing the lunatic fringe – ‘gold cultists’ was the term used at the recent Bloomberg Precious Metals Forum in London. Be this as it may there is an indication that the ‘cultists’ may be gaining a little ground in that some hitherto reluctant very respectable mainstream media have at least recognised in print that there is a raft of opinion which holds this view, having totally ignored this in the past.

But that is gold – with all the political implications that exist. The depths of government economic policies may be devious and remain well hidden with the ultimate intent of maintaining confidence in the status quo. We continually see this in the form of economic indicator goalposts being moved to present data in a more favourable light, so why not organise surreptitious gold price controls to do the same? Who knows outside the economic establishment itself – and it’s not saying apart from denials of such a policy. But who believes such denials these days at any level of the political process?

This longish but absolute must read commentary by Lawrie put in an appearance on the mineweb.com Internet site at 4:59 p.m. London time on their Friday afternoon, which was 11:59 a.m. in New York.   I found it all by myself in the wee hours of this morning---and must admit that I was both surprised and gratified to see it.

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Jun 05, 2015

IMF Panics - Slashes U.S. Growth Forecasts, Demands Fed Stay on Hold For Another Year

Anxiety over financial stability and shadow banking risks appear to have force Christine Lagarde and her fellow extrapolators to hit the panic button:

  • *IMF CUTS U.S. 2015 GROWTH FORECAST TO 2.5% FROM 3.1%
  • *FED SHOULD WAIT FOR TANGIBLE SIGNS OF WAGE, PRICE GAINS: IMF
  • *DOLLAR `MODERATELY OVERVALUED,' CURBING U.S. GROWTH, JOBS: IMF
  • *IMF URGES FED TO DELAY FIRST RATE INCREASE UNTIL 1H 2016

Adding that they viewed the Dollar as "moderately overvalued" and any more appreciation would be "harmful," it seems global disinflationary pressures have left the IMF no choice but to say publicly what everyone has uttered under their breath.

This is the Zero Hedge spin on a Bloomberg story yesterday.  It was posted on the ZH website at 9:41 a.m. EDT---and it's courtesy of Dan Lazicki.  It's worth reading.  There was a Reuters story on this as well.  It was filed from Washington and headlined " IMF warns Fed should delay rate hike until 2016"---and I found it embedded in a GATA release.

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Marc Faber: Forget a Fed rate hike; QE4 coming

While some U.S. economic data suggest the economy is ready for normalizing monetary policy, Marc Faber said Thursday the Fed will have to unleash another round of quantitative easing.

"When I look at the whole financial sector … I feel like [I'm] on the Titanic. We're fighting about deck chairs, [meaning] which assets are performing best and we're fighting over the best tables in the ballroom, but I think it's best to find your safety boat and ladder because I think the financial sector will implode one day," the editor and publisher of the Gloom, Boom & Doom Report said on CNBC's "Squawk Box."

Faber made his remarks a day after the Federal Reserve's Beige Book said economic activity has expanded at a "modest" to "moderate" pace over the past few months.

"All the central banks are so deep in the mud that, in my view, they will continue to essentially buy assets," Faber said.

This 3-video clip interview totals about 8 minutes and change---and was posted on the CNBC website very early MDT yesterday morning---and I thank Ken Hurt for sending them along.

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Bond Rout Wipes Out 2015 Gains as Traders Stay Glued to Screens

The global bond market sell-off has erased all of this year’s gains as historic market moves from Germany to the U.S. and Japan whipsaw traders.

After being up as much as 2.3 percent as of mid-April, the Bank of America Merrill Lynch Global Broad Market Index of bonds with a total face value of $41 trillion is now down 0.4 percent for the year.

Bond traders have been caught off guard by signs the worldwide economy is likely to avoid mass deflation and by improvement in the euro zone’s economy, leaving little incentive to own debt securities with yields that in some cases are below zero. Fixed income continued its slide on Thursday, a day after European Central Bank President Mario Draghi said investors should get used to the heightened volatility they’ve seen in recent weeks.

“This is sheer panic in the market from the standpoint of what’s been happening in Europe,” said Thomas di Galoma, head of fixed-income rates and credit at ED&F Man Capital Markets in New York. “Most of Wall Street is guarded here as far as taking on new positions.”

This Bloomberg article appeared on their Internet site at 4:45 p.m. on Wednesday afternoon Denver time, but was updated late yesterday morning.  There's also a 3:02 minute video clip embedded as well.  I thank West Virginia reader Elliot Simon for sharing it with us.

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Rick Santelli: Here's something important

CNBC's Rick Santelli discusses bond prices and yields in this 1:04 minute video clip that was posted on their website about 2 p.m. EDT Thursday afternoon---and it's the second offering of the day from reader Dan Lazicki.

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Economy’s biggest issue: People don’t have money to spend

Anyone with even a quarter of a brain now understands that the US economy got off to a bad start this year.

There was an economic contraction in the first three months — when the nation’s gross domestic product fell at an annualized rate of 0.7 percent — that some quarter-brainers are still blaming on the cold weather, strikes at ports, the strong dollar, solar flares, Martian landings and (insert your own poor excuse here).

The truth: Most of these excuses are part of the problem, although I didn’t personally see or not see the Martians.

But the biggest part is that people don’t have enough money to spend. Interest from savings is down to zero, people don’t liquidate stock gains to make purchases, and job and income growth has been sketchy.

This right-on-the-money commentary by John Crudele was posted on The New York Post website at 10:26 p.m. on Wednesday evening---and I thank reader "G. Roberts" for bringing it to our attention.

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Hunting for Hackers, N.S.A. Secretly Expands Internet Spying at U.S. Border

Without public notice or debate, the Obama administration has expanded the National Security Agency’s warrantless surveillance of Americans’ international Internet traffic to search for evidence of malicious computer hacking, according to classified N.S.A. documents.

In mid-2012, Justice Department lawyers wrote two secret memos permitting the spy agency to begin hunting on Internet cables, without a warrant and on American soil, for data linked to computer intrusions originating abroad — including traffic that flows to suspicious Internet addresses or contains malware, the documents show.

The Justice Department allowed the agency to monitor only addresses and “cybersignatures” — patterns associated with computer intrusions — that it could tie to foreign governments. But the documents also note that the N.S.A. sought permission to target hackers even when it could not establish any links to foreign powers.

The disclosures, based on documents provided by Edward J. Snowden, the former N.S.A. contractor, and shared with The New York Times and ProPublica, come at a time of unprecedented cyberattacks on American financial institutions, businesses and government agencies, but also of greater scrutiny of secret legal justifications for broader government surveillance.

This essay, filed from Washington, showed up on The New York Times website yesterday sometime and, if it interests you, it will take just under ten minutes to read.  It's the first offering of the day from Roy Stephens.

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Interest Rates in Brazil Rise to 13.75 Percent

Brazilian Central Bank’s Comitê de Política Monetária – Copom (Monetary Policy Committee) decided unanimously on Wednesday (June 3rd) to increase the country’s benchmark interest rate (Selic) by 0.5 percentage points from 13.25 percent to 13.75 percent per year. This is the sixth consecutive time the Selic has increased.

“Assessing the macroeconomic scenario and the perspectives for inflation, the Copom decided, unanimously, to increase the Selic rate by 0.50 percentage points to 13.75 percent per year, without bias,” said the Copom statement after the meeting.

The latest increase of the Selic shows the country going in the opposite direction of its international counterparts with growth well below average and interest rates much higher than most other countries, says Fecomercio-RJ (Rio de Janeiro Commerce Association), “We are on the tailgate in terms of growth and leading when it comes to interest rates,” said the association in a press release Wednesday night.

For the association what is needed is a structural reform. “It is time to increase the efficiency of public spending, reduce tax burdens, encourage investments and expand corporate productivity, which will in turn help contain inflation,” adds the note.

The only reason that interest rates are this high is to prevent capital flight, so hyperinflation and maybe capital controls are probably just around the corner.  Great shades of Venezuela!  This news item was filed from São Paulo yesterday---and posted on the riotimesonline.com Internet site.  I thank reader M.A. for sending it our way.

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Argentina's President Cristina Fernandez went to Russia to chat with Edward Snowden

Argentina's President Cristina Fernandez held talks with U.S. whistleblower Edward Snowden during a visit to Russia in April, Anthony Romero, director of the American Civil Liberties Union and one of Snowden's lawyers said on Thursday.

The two hour-long meeting took place after an Argentine TV channel, citing intelligence documents provided by Snowden, revealed Britain spied on Argentine military and political leaders from 2006 to 2011 to safeguard the security of the disputed Falkland Islands.

"She met with him toward the end of April," Romero told reporters in the Argentine capital Buenos Aires.

This Reuters article, filed from Buenos Aires, was picked up by the businessinsider.com Internet site at 9:05 p.m. EDT yesterday evening---and I thank Roy Stephens for sending it our way.

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Canada suffers indirect economic blow back from sanctions against Russia: Oliver

Canada is experiencing indirect economic fallout from the sanctions it and other countries have imposed against Russia, federal Finance Minister Joe Oliver acknowledged Tuesday.

Western European countries that do business with Canada are feeling the negative impact of economic sanctions, which have also been imposed by the U.S. and Europe, Oliver said.

That, in turn, reaches across the Atlantic because when growth in Europe slows, it also affects Canadian trade, he added.

"I think most European countries would acknowledge there has been some economic impact on Europe from these sanctions," Oliver said after a committee hearing.

Canada has been a branch plant of the U.S. Empire for decades---and it's hard to believe that I could possibly long for the return of the likes of Pierre Elliot Trudeau as Prime Minister, although it does cross my mind at times.  He could never be bought by the Americans.  Harper---and Mulroney before him---are bought and paid for.  This article appeared on the ca.finance.yahoo.com Internet site on early Wednesday morning EDT---and I thank reader Doug Milne for finding it for us.

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Washington Politicizes Football — Paul Craig Roberts

Washington’s attack on world soccer is following the script of Washington’s attack on the Russian-hosted Sochi Olympics. The difference is that Washington couldn’t stop
the Olympics from being held in Sochi, and was limited to scaring off westerners with lies and propaganda. In the current scandal orchestrated by Washington, Washington intends to use its takeover of FIFA to renege on FIFA’s decision that Russia host the next World Cup.

This is part of Washington’s agenda of isolating Russia from the World.

This Washington-orchestrated scandal stinks to high heaven. It seems obvious that the FIFA officials have been arrested for political reasons and that the recently overwhelmingly-reelected FIFA president, Sepp Blatter, was forced to resign by Washington’s threats to indict him as well. This can happen because Washington no longer is subject to the rule of law. In Washington’s hands, law is a weapon that is used against everyone, every organization, and every country that takes a position independent of Washington.

This clears the deck for Washington and its British lapdog to take over FIFA, which henceforth will be used to reward countries that comply with Washington’s foreign policy and to punish those who pursue an independent foreign policy.

This very interesting commentary by Paul put in an appearance on his website on Wednesday---and it's another offering from reader M.A.

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Soccer Scandal: How Interpol got into bed with FIFA

As the investigation into corruption in world soccer grows more intense, one organization that has a €20 million deal with FIFA now finds itself in an embarrassing corner: Interpol.

Whereas corporate sponsors like Samsung and Visa pour money into FIFA’s coffers, in Interpol’s case it is the other way around: the largesse comes from FIFA. Millions of euros of soccer money flow into the law enforcement organization’s bank account each year, raising serious questions about conflicts of interest and Interpol’s impartiality.

On Monday — after insisting for several days that its collaboration with FIFA would continue as normal — Interpol quietly revealed to POLITICO that it had decided to “review” the arrangement. To many, this will seem like too little too late.

Interpol’s deal with FIFA is just the tip of a fiscal iceberg. Since 2011, Interpol has signed deals with a large number of private “partners,” including tobacco giants, pharmaceutical firms and tech companies — such as Philip Morris International, Sanofi, and Kaspersky Lab — the proceeds of which have swollen its operational budget by almost a third.

The sleeze just keeps getting worse and, without doubt, we've only seen the beginning of it.  This news item showed up on the politico.eu website at 4:58 p.m. Central Europe Time [CET] on their Wednesday afternoon, but was updated on Thursday afternoon.  I thank South African reader B.V. for his first contribution to today's column.

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Greece delays IMF payment, P.M. to brief angry parliament

Greece delayed a key debt payment to the International Monetary Fund due on Friday as Prime Minister Alexis Tsipras, facing fury among his leftist supporters, demanded changes to tough terms from international creditors for aid to stave off default.

The IMF said Athens planned to bundle four payments due in June into a single 1.6 billion euro lump sum which is now due on June 30.

It was the first time in five years of crisis that Greece has postponed a repayment on its 240 billion euro bailouts from euro zone governments and the IMF, even though Tsipras said earlier this week that Athens had the money and would make the payment.

The delay came as German Chancellor Angela Merkel said talks on a cash-for-reforms deal were still far from reaching an agreement.

This Reuters news story, co-filed from Athens and Brussels was posted on their website at 6:25 p.m. EDT Thursday evening---and I thank Orlando, Florida reader for digging it up for us.  The Bloomberg take on this bears the headline " Greece Defers IMF Payment as Merkel Says Resolution Far Away"---and it's courtesy of Roy Stephens.

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Greece misses IMF payment in warning shot as showdown with Europe escalates -- Ambrose Evans-Pritchard

Greece is to take the drastic step of skipping a €300m payment to the International Monetary Fund on Friday, invoking an obscure mechanism in abeyance since the 1970s to bundle all debts due in June and pay them at the end of the month.

It is the first time that a developed country has ever missed a payment to the IMF since the creation of the Bretton Woods institutions at the end of the Second World War.

The news broke after the Athens stock exchange had closed but a bloodbath is feared when the bourse opens on Friday. Yields on two-year Greek bonds spiked 63 basis points to 21.8pc amid mounting fears of a deposit run on Greek banks and the imposition of capital controls as soon as this weekend.

Although one of the "fair-haired" favourites of the New World Order crowd, I'm always interested in his take on events.  This commentary appeared on the telegraph.co.uk Internet site at 8:45 p.m. BST yesterday evening, which was 3:45 p.m. in Washington.  Roy Stephens sent it our way in the wee hours of this morning Denver time.

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Ukraine's Poroshenko warns of Russian invasion threat after fighting surge

Ukraine's president told his military on Thursday to prepare for a possible "full-scale invasion" by Russia all along their joint border, a day after the worst fighting with Russian-backed separatists in months.

His address in parliament was one of the first times Petro Poroshenko has used the word "invasion" to refer to Russia's behavior since the start of a separatist rebellion in the east in which the United Nations says more than 6,400 people have been killed.

Referring to a 12-hour firefight involving artillery on both sides on Wednesday when Ukraine says the rebels tried to take the town of Maryinka, Poroshenko said: "There is a colossal threat of a renewal of large-scale military operations from the side of the Russian-terrorist groups."

"The military must be ready as much for a renewal of an offensive by the enemy in the Donbass as they are for a full-scale invasion along the whole length of the border with Russia. We must be truly ready for this."

This Reuters article, filed from Kiev, appeared on their Internet site at 3:59 p.m. EDT yesterday afternoon---and as Roy Stephens said in his covering e-mail---"Unbelievable bulls hit!"  That it is, dear reader.

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Kremlin: Timing of Kiev-provoked Donbass tensions linked with looming E.U. summit

The timing of the new tensions in Donbass, provoked by the Kiev forces, is connected with the upcoming EU summit, Kremlin spokesman Dmitry Peskov said. He added that Kiev has breached the Minsk deal and Moscow is waiting for the OSCE’s reaction.

"The violations are obvious and [Foreign] Minister [Sergey] Lavrov has already said that the representatives of the OSCE are to draw corresponding conclusions and to clearly identify who is responsible for these violations [in eastern Ukraine],” Kremlin spokesman Dmitry Peskov told journalists Thursday.

According to Peskov, the Kiev authorities are responsible for the recent escalation of the crisis in the troubled region.

“Donbass is being shelled. Self-defence forces can’t shell their own territory,” he said.

This story showed up on the Russia Today website at 9:49 a.m. Moscow time on their Thursday morning, which was 2:49 a.m. EDT in Washington.  I thank reader M.A. for sending it our way.

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U.S. ignores OSCE data, blames ‘majority’ of Ukraine truce violations on rebels

US State Department spokesperson Marie Harf refused to directly acknowledge Kiev’s role in violating the Minsk peace agreements in eastern Ukraine, turning a blind eye on daily OSCE reports that equally implicate the government and the rebel forces.

The video below shows RT’s Gayane Chichakyan grilling Harf – and failing to get a straight answer on the issue despite multiple attempts.

Chichakyan reminds Harf about the daily reports compiled by the Organization for Security and Co-operation in Europe (OSCE) listing violations, noting that the breaches are more or less equally split between both sides of the conflict.

Harf continues to insist that the “majority of violations” to the Minsk agreements have been committed by rebel forces and not Ukrainian troops.

This news item is also courtesy of the Russia Today website---and it was posted on their Internet site in the wee hours of Thursday morning Moscow time.  It's the second offering in a row from reader M.A.

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Commodity prices weigh heavily on top 40 mining giants

The tough fight faced by the global mining industry in 2014 would escalate into a brawl this year as mining companies worldwide struggled to emerge from depressed markets, PwC’s Africa Mining Centre of Excellence head Michal Kotze said on Thursday.

Widespread government intervention, significant conflicts surrounding strategy debates and other internal industry conflicts, “huge” competition, weakening commodity prices with increasing short-term volatility and rising shareholder activism had left industry on the ropes.

A reduction in capital spend, somewhat higher production and “unexpected help” from currency devaluations and lower input costs had assisted the mining industry to “manage expectations” during 2014 despite continued headwinds from weak commodity prices, the latest PwC ‘Mine’ report showed.

By April 2015, iron-ore prices had dropped to below 50% of the value recorded in January 2014, while coal and copper prices dropped to below 75% and 80% of their respective price structures during the same period.

This interesting article, filed from Johannesburg, appeared on the miningweekly.com Internet site yesterday---and I thank South African reader B.V. for his second contribution to today's column.

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Gold mining’s enormous positive impact on global economy – WGC

A new report released today from the World Gold Council, produced in association with Maxwell Stamp, a leading international economics consultancy, reveals that the gold mining industry directly contributed around US$83.1 billion to the global economy in 2013. Once the indirect economic impact is taken into account, this figure increases to US$171.6 billion. The social and economic impacts of gold mining report builds on previous research, including studies by the World Gold Council, to provide an understanding of the socioeconomic impacts of the commercial gold mining industry at both a global, national and host community level.

The report’s analysis of the impacts of large-scale commercial gold mining in 47 gold producing countries (accounting for over 90% of the world’s gold production) shows that gold mining companies in total contributed over US$171 billion to the global economy in 2013 when the value created by support services and indirect employment is taken into consideration.

Globally, gold mining companies directly employed over one million people in 2013, with over three million more people employed as a result of the industry’s suppliers and support services.

This commentary by Lawrence Williams showed up on his website on Wednesday---and it's worth reading.

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End of an era as largest gold ETF drops out of top 10

In May more than $900m left the world's largest physical gold-backed ETF, dropping the fund to number 11 in rankings it briefly led four years ago.

Once the largest fund of its kind in the world, top physical gold-backed exchange traded fund – SPDR Gold Shares  – has dropped out of the top ten.

According to ETF.com GLD suffered outflows of $902 million or 3% of its total assets under management during May.

GLD still dwarfs other physically-backed exchange traded gold products holding 44.5% of the global total at 709.9 tonnes or 22.8m ounces worth $26.8 billion.

Well, it's not going to be out of the Top 10 for long, because when the gold price is finally allowed to rise, it won't take much time to rocket back into top spot.  This must read article showed up on the mining.com Internet site yesterday---and I thank Jim Ackers for pointing it out.

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Southwest England was scene of prehistoric gold rush, new research says

New archaeological research is revealing that south-west Britain was the scene of a prehistoric gold rush.

A detailed analysis of some of Western Europe’s most beautiful gold artifacts suggests that Cornwall was a miniature Klondike in the Early Bronze Age.

Geological estimates now indicate that up to 200 kilos of gold, worth in modern terms almost £5 million, was extracted in the Early Bronze Age from Cornwall and West Devon’s rivers – mainly between the 22nd and 17th centuries BC.

New archaeological and metallurgical research suggests that substantial amounts were exported to Ireland, with smaller quantities probably also going to France. It also suggests that the elites of Stonehenge almost certainly likewise obtained their gold from the south-west peninsula, as may the rulers of north-west Wales, who took to wearing capes made of solid gold.

This longish, but very interesting gold-related news item appeared on the independent.co.uk website yesterday BST sometime---and I found it on the gata.org Internet site.

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Russia to Increase Its Gold Reserves – Central Bank Head

The head of Russia’s Central Bank is determined to increase the country’s gold reserves to its previous levels in 2012-2013, from $360.5 billion up to $500 billion.

Russia will increase its gold reserves by up to $500 billion, said Elvira Nabiullina, the head of Russia's Central Bank, Rossiyskaya Gazeta reported.

Russia will aim at $500 billion, despite the fact that a sufficient level of gold reserves for the country is $188 billion, Nabiullina said.

Currently, Russia owns $360.5 billion worth of gold reserves. The amount covers more than three months of imports, short-term foreign debt and 20 percent of Russia's entire money supply.

This story was posted on the sputniknews.com Internet site at 4:31 p.m. Moscow time on their Thursday afternoon, which was 9:31 a.m. EDT in New York.  It's a must read as well---and it's the final offering of the day from reader M.A.

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40% drop in wedding days in 2015 may dent gold demand

A nearly 40% drop in the number of wedding days in the second half of 2015 according to the Hindu calendar may hit gold jewellery off-take this year. Retailers and gold traders say that the demand for jewellery sales may drop between 15 and 25% depending on the price of the yellow metal in the coming months.

Talking to ET, Ketan Shroff, spokesperson of India Bullion and Jewellers Association said, "The number of auspicious days for wedding is less this year, which will definitely dent the dent the demand of gold jewellery during the second half of this year. If prices correct at Rs 25,000 per 10 gm-level then the impact will be little less as people will still buy despite wedding dates being less. In that case, jewellery demand will drop by 10 to 15%. But if price remains at Rs 27,000 per 10 gm-level then jewellery sales will come down by 25% in the second half."

This gold-related story, filed from Kolkata, was posted on the The Economic Times of India website at 10:17 a.m. IST yesterday morning---and I found it over at the Sharps Pixley website.

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Who's Next? China Finally Starts Snapping Up Gold Miners

One (perhaps the only) bright spot in the past few year’s gold market has been Chinese and Indian demand for the metal. Here’s a chart, courtesy of Ed Steer’s Gold & Silver Daily, showing that the two countries have imported a cumulative 15,000 tonnes since 2008, which is not far from the total production of the world’s gold mines in that period.

But physical bullion is only part of the story, and may not be the biggest one going forward. Speculation has been circulating for years that China’s miners, flush with cash from selling their low-cost output to the government, would soon start buying up the world’s in-ground gold reserves.

This article by John Rubino over at the DollarCollapse.com Internet site, was picked up the folks at Zero Hedge at 7:30 p.m. on Thursday evening---and it's the final offering of the day from South African reader B.V.  It's worth reading if you have the time.

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Gold Sales Slump at Mints From Perth to U.S. as Bullion Shunned

Gold sales from Australia’s Perth Mint, which refines all the bullion output from the world’s second-biggest producer, tumbled to the lowest level in three years, adding to signs of weakening demand as prices drop.

Sales of gold coins and minted bars totaled 21,671 ounces in May, the Perth Mint said on its website on Friday. That’s down from 26,545 ounces in April and the lowest since April 2012, according to data compiled by Bloomberg. Silver sales were 337,511 ounces from 472,273 ounces a month earlier.

Gold retreated to a one-month low this week as investors cut holdings in bullion-backed exchange-traded products to the lowest since 2009. Surging stock markets in the U.S. and China, as well as prospects for rising U.S. interest rates and a stronger dollar, hurt demand for the precious metal. In the U.S., sales of American Eagle gold coins dropped 27 percent in May after posting a 37 percent slump in April, according to U.S. Mint data compiled by Bloomberg.

This tiny Bloomberg story showed up on their website at 1:21 a.m. Denver time this morning---and I snatched it off the Sharps Pixley website just before I hit the send button on today's column.

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Ted Butler: Stepping Up to the Plate

Silver market analyst and whistleblower Ted Butler congratulates First Majestic Silver CEO Keith Neumeyer for appealing to the U.S. Commodity Futures Trading Commission for an explanation of manipulation of the silver futures market. (See http://www.gata.org/node/15422.)

Butler also thanks GATA Board of Directors member Ed Steer for encouraging him to draft a letter to the CFTC that executives of monetary metals mining companies could use for this purpose.

Butler's commentary is headlined "Stepping Up to the Plate" and it's posted at GoldSeek's companion site, SilverSeek.com.  This short commentary by Ted falls into the absolute must read category.  I thank Chris Powell for the two introductory paragraphs above.

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Jun 04, 2015

‘Freedom Act will make no difference’ to NSA surveillance

The only practical effect of the U.S. Freedom Act will be that now the NSA has to file a request to the court to get data from the telephone companies, but the same volume of NSA spying will remain, says Ted Rall, a political cartoonist and author.

The U.S. Senate has passed the so-called U.S. Freedom Act, the first surveillance reform in a decade in America. It comes just over a day after the infamous Patriot Act that provided legal grounds for the National Security Agency's snooping expired.

RT: The Freedom Act has been passed, is it a step in the right direction? There have been claims by some US lawmakers that it does not go far enough, what's your take?

This worthwhile story showed up on the Russia Today website at 1:29 p.m. Moscow time on their Wednesday afternoon, which was  6:29 a.m. EDT in Washington on their Wednesday morning.  Today's first article is courtesy of Roy Stephens.

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Companies' Borrowing Spree Darkens Stock Market Future

A dark shadow is lurking behind the happy façade of rising stock prices.

U.S. companies are borrowing money faster than they’re earning it -- and they’re doing it at the quickest pace since the aftermath of the financial crisis.

Instead of deploying the debt to build factories, hire new workers or expand product lines, companies are funneling more of their money to shareholders or using it to fund deals. Stock buybacks reached an all-time high last year and the volume of global mergers and acquisitions announced so far this year would make it the second-busiest ever, according to data compiled by Bloomberg.

The debt undermines future growth and could dent company income when borrowing costs rise. Higher interest rates will make already indebted companies less desirable to lend to. The consequence: profitability, buoyed by cheap money since rates went to near-zero in 2008, will sink.

There's nothing really new here, but I though it worth posting nonetheless.  This item appeared on the Bloomberg website at 10:00 p.m. Denver time on Tuesday evening---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Electronic trading brings great benefits: CFTC's Massad

Timothy Massad, CFTC Chairman, discusses oil market volatility, and electronic trading.

This brief 1:54 minute CNBC video clip appeared on their website around 2 p.m. EDT yesterday afternoon.  I passed it by Ted---and he said that "---great benefits to who? Perhaps HFT manipulators but certainly not silver or gold investors, or commodity producers in general---very telling."  I thank Dan Lazicki for sending it along---and it's worth two minutes of your time to watch it.

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New-car loans keep getting longer

New-car sales are running at near-peak levels, partly because many consumers are financing their purchases for longer terms.

The average new car loan has reached a record 67 months, reports Experian, the Ireland-based information-services company. The percentage of loans with terms of 73 to 84 months also reached a new high of 29.5% in the first quarter of 2015, up from 24.9% a year earlier.

Long-term used-vehicle loans also broke records with loan terms of 73 to 84 months reaching 16% in the first quarter 2015, up from 12.94% — also the highest on record.

"While longer-term loans are growing, they do not necessarily represent an ominous sign for the market," said Melinda Zabritski, Experian's senior director of automotive finance. "Most longer-term loans help consumers keep monthly payments manageable while allowing them to purchase the vehicles they need without having to break the bank.

This news item appeared in the Detroit Free Press very early Monday evening EDT---and was picked up by the usatoday.com Internet site since then.  I found it in yesterday's edition of the King Report.

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The College Commencement Speech Every Graduate Needs to Hear

Earlier this week, we brought you "A Cynical Look At Tim Cook's Commencement Speech," which outlined an L.A. Times piece that took aim at what one columnist suggested was a disingenuous (if standard) effort on the part of Apple's CEO when he spoke to students at George Washington. 

Today, we bring you a commencement speech for the real world.

"In effect, you are graduating with a mortgage but no house. And what did you get? A subprime education."

"To those who majored in gender studies, film deconstruction, or any other of today's academic fads, to you I have this advice: when this commencement speech is over, do not bother looking for a job. Instead go straight to the unemployment office."

"Graduates, you have been saddled with debt and bad ideas. Good luck, you're going to need it."

This Zero Hedge article from 2:20 p.m. EDT on Wednesday has a 5:54 minute video clip embedded featuring George Will who really tells it like it is---and it's the second offering of the day from Dan Lazicki.

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WTI Crude Pumps-and-Dumps as Increased Production Trumps Surprise Inventory Draw

Following last night's inventory build report from API, expectations adjusted to a 818k build for the DOE data this morning. However, for the 5th week in a row, DOE reported a draw (this time of 1.95 million barrels).  WTI Crude had rallied into the data but was still in the red from yesterday's close and spiked on the inventory news.

However, once the machines had a chance to see that production rose once again - to a new cycle record - prices began to slide....

This brief 3-chart Zero Hedge story is worth a quick look.  It showed up on their Internet site at 10:37 a.m. EDT yesterday morning.  It's another contribution from Dan L.

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WikiLeaks announces $100K bounty for trade deal text

WikiLeaks announced an effort Tuesday to crowd-source a $100,000 reward for the remaining chapters of the Trans-Pacific Partnership trade deal, after the organization published three draft chapters of the deal in recent years.

“The transparency clock has run out on the TPP. No more secrecy. No more excuses. Let’s open the TPP once and for all,” WikiLeaks founder Julian Assange said in a statement.

Critics say that the deal being negotiated by the United States and other Pacific Rim countries would hurt American workers and the economy, while proponents argue that it would help the United States establish a stronger economic foothold in the region with regard to China.

The three chapters that WikiLeaks has already published include sections on intellectual property rights, published in November 2013, the environment, published in January 2014, and investment, published this March.

The $100,000 reward marks the beginning of a new program for the organization, in which users can pledge funding to get the chapters they want the most.

The above five paragraphs are all there is to this interesting news item that put in an appearance on the politico.com Internet site very early Tuesday morning---and it's the second offering of the day from Roy Stephens.

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In a World of Tax Hells, a New Haven Emerges

It’s not some half-baked attempt to create a new country. It’s the real deal.

Best of all, it’s a country founded on staunch libertarian and free-market principles.

But I don’t blame you if you’re skeptical. I was too. That is, until I spoke with Vit Jedlicka.

Vit is the founder and president of Liberland. It’s a slice of land on the edge of Serbia, Croatia, and the Danube River. Neither country has ever claimed it due to a border quirk. Under international law, that opened up the opportunity for Liberland.

I posted a story about this tiny geographical aberration earlier this year---and now International Man's senior editor Nick Giambruno has stumbled across it.

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Bunds Crater Most This Century

It appears Draghi's comments are not what the market wanted to hear.  Bunds have crashed over 30 bps in the last 2 days...the biggest 2-day spike since Oct 1998...

It's carnage...

This tiny Zero Hedge story with two embedded chart is worth a quick peek.  It was posted on their Internet site at 9:44 a.m. EDT yesterday morning.

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Greek crisis fuels Juncker power grab

For European Commission President Jean-Claude Juncker, the roller-coaster negotiations with Athens haven’t just been about keeping Greece in the euro.

Behind the scenes, he has used the crisis to try to establish the European Commission as the union’s indispensable power broker, putting him at loggerheads with national governments.

At stake is the balance of power in the European Union. There has always been a natural tension between the Commission, as the E.U.’s executive arm, and the European Council, the forum of member states. Now, Juncker is trying to tip the scales in the Commission’s favor, arguing that as the Commission’s first popularly elected president, he has a mandate to do so.

Juncker’s strategy was on full display this week. On Monday, he traveled to Berlin, where he pushed Angela Merkel and Christine Lagarde to take a softer line on Greece. “Grexit is not an option,” he told a German newspaper ahead of the meeting, contradicting recent statements by some of the creditors. Juncker was scheduled to host Greek Prime Minister Alexis Tsipras Wednesday evening in Brussels for consultations on Athens’ latest reform proposals.

This article showed up on the politico.eu website at 5:15 p.m. CET [Central Europe Time] yesterday---and it's the third story of the day from Roy Stephens.

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Europe has no choice - it has to save Greece

Greece has been through the trauma of default and currency collapse before. It went horribly wrong.

The sequence of events in the inter-war years have a haunting relevance today. In 1932, Greece turned to the League of Nations and British bankers in a last-ditch effort to defend the drachma under the Gold Standard as reserves drained away.

The creditors dithered for three months but ultimately said “no”. Greece devalued and imposed a 70pc haircut on loans. Debt service costs fell by two-thirds at a stroke.

It seemed like a liberation at first. The economy was growing briskly again - at more than 5pc - within a year. Then the sugar-rush faded. The credit system remained broken. Greek industry was too backward to exploit a cheaper exchange rate, unlike Japanese industry under Takahashi Korekiyo at the same time. .

The government never regained its credibility. There were four attempted coups d’etat, ending in the military dictatorship of Ioannis Metaxas. Political parties were abolished. Trade union leaders were killed or imprisoned. Greece fell to Balkan fascism.

This longish commentary by Ambrose Evans-Pritchard showed up on The Telegraph's website at 9:14 p.m. BST yesterday evening---and it's worth reading.  Roy Stephens sent it our way in the wee hours of this morning.

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Ukrainian President Poroshenko Struggles to Fight Oligarchs

Since his election, Ukrainian President Petro Poroshenko has struggled to free his country from the influence of the oligarchs. But a new generation of reformers is determined to make it happen.

When Ukrainian President Petro Poroshenko congratulates him with a handshake, Artem Sytnyk presses his lips together and blinks. The reporters' flashes bother him. Still. Until recently, the 35 year old didn't even have a Wikipedia page, and now he's one of the most important men in Ukraine. A jury selected him from a pool of 176 candidates to make him the head of the country's new anti-corruption office.

The reformers first learned about Artem Sytnyk because in 2011, under the previous administration, he had left his job as a state prosecutor to protest the ways politics had become entangled in the country's justice system. At the time, the gesture was unprecedented. Now it has qualified him to become the new government's top corruption fighter.

This 10-minute read/essay appeared on the German website spiegel.de yesterday evening Europe time---and it's no surprise that it's courtesy of Roy Stephens.  It also sports a new headline, as it now reads "Angels and Demons: Ukraine, One Year After Poroshenko".

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Missile maker says Russia did not shoot down Malaysian plane over Ukraine

The Russian company that makes the BUK air defense system that was used to shoot down a Malaysian airliner in east Ukraine said on Tuesday the plane was hit by a missile deployed by Ukraine and not widely used by Russia's military.

State-run Almaz-Antey said its own analysis of the wreckage of the Malaysia Airlines plane brought down on July 17 last year, killing 298 people, indicated it was hit by a BUK 9M38M1 surface-to-air missile armed with a 9H314M warhead.

Shrapnel holes in the plane were consistent with that kind of missile and warhead, it said.

Such missiles have not been produced in Russia since 1999 and the last ones were delivered to foreign customers, it said, adding that the Russian armed forces now mainly use a 9M317M warhead with the BUK system.

This Reuters article, filed from Moscow, appeared on their website late on Tuesday morning EDT---and I thank  Elliot Simon for bringing it to our attention.

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Russian Ruble Tumbles to 2-Month Lows, Stocks Drop Following "Large-Scale" Rebel Offensive in Ukraine

The Ruble just hit 54/USD - its weakest since early April - as IFX reports a "large-scale" rebel offensive in eastern Ukraine involving 10 tanks and around 1,000 troops. Ukraine's military has redeployed troops to halt this rebel offensive and has informed its international partners on the re-deployment which leaves The Minsk Accord hanging by a thread. Ironically Ukraine bonds had earlier jumped to 3-month highs on optimism surrounding restructuring that haircuts would not be as severe, but the re-ignition of tensions in the country have taken the shine of that exuberance.

  • *MICEX EXTENDS LOSSES, DROPS 1.2% AFTER IFX REPORT ON UKRAINE
  • *RUBLE SINKS 2.2% AFTER IFX REPORT OF REBEL OFFENSIVE IN UKRAINE

This brief news item, with a couple of excellent charts, was posted on the Zero Hedge website at 9:21 a.m. EDT yesterday morning---and I thank reader M.A. for sharing it with us.

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Now the truth emerges: how the U.S. fuelled the rise of Isis in Syria and Iraq

The war on terror, that campaign without end launched 14 years ago by George Bush, is tying itself up in ever more grotesque contortions. On Monday the trial in London of a Swedish man, Bherlin Gildo, accused of terrorism in Syria, collapsed after it became clear British intelligence had been arming the same rebel groups the defendant was charged with supporting.

The prosecution abandoned the case, apparently to avoid embarrassing the intelligence services. The defence argued that going ahead with the trial would have been an “affront to justice” when there was plenty of evidence the British state was itself providing “extensive support” to the armed Syrian opposition.

That didn’t only include the “non-lethal assistance” boasted of by the government (including body armour and military vehicles), but training, logistical support and the secret supply of “arms on a massive scale”. Reports were cited that MI6 had cooperated with the CIA on a “rat line” of arms transfers from Libyan stockpiles to the Syrian rebels in 2012 after the fall of the Gaddafi regime.

Clearly, the absurdity of sending someone to prison for doing what ministers and their security officials were up to themselves became too much. But it’s only the latest of a string of such cases. Less fortunate was a London cab driver Anis Sardar, who was given a life sentence a fortnight earlier for taking part in 2007 in resistance to the occupation of Iraq by U.S. and British forces. Armed opposition to illegal invasion and occupation clearly doesn’t constitute terrorism or murder on most definitions, including the Geneva convention.

This incredible, but short essay, which certainly falls into the must read category for any serious student of the New Great Game, appeared on theguardian.com Internet site at 8:56 p.m. BST yesterday evening, which was 3:56 p.m. EDT in New York.  I thank South African reader B.V. for finding it for us.

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What's OPEC Going to Do With Iran's Million Barrels a Day?

Just when it looked like OPEC was winning the war with U.S. shale-oil drillers, a new front is opening up within its own ranks.

The Organization of Petroleum Exporting Countries’ summit on June 5 to determine the group’s output will come three weeks before a deadline for a deal on Iran’s nuclear program. The government in Tehran says it can add almost 1 million barrels to daily production within six months of sanctions being lifted.

That’s a million barrels that OPEC hasn’t had to worry about since it adopted a new strategy in November of favoring market share over propping up prices. The group is already pumping the most oil in more than two years to quash higher-cost producers, and while Iran’s return would add to the pressure on OPEC’s rivals, it will also heighten competition within the group for buyers.

There’s a lot of jockeying for position going on in OPEC right now,” Ole Hansen, head of commodity strategy at Copenhagen-based Saxo Bank A/S, said by phone. “The Saudis are increasing production and anyone else in OPEC who can is also doing the same. If OPEC’s not willing to cut output to make room for Iran, they have to look for reductions from producers outside the group.

This Bloomberg article put in an appearance on their website late Tuesday afternoon Denver time---and it's the third and final offering of the day from Elliot Simon, for which I thank him.

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One of the World's Largest Silver Miners Slams the CFTC About Silver Market Manipulation

It has long been known to silver market watchers that when it comes to the price of paper silver, there has long been a chronic and extremely concentrated shorting presence at the Comex, one which the CFTC has persistently refused to address even though it consistently surpasses the proposed limits on derivative positions. Now, at long last, a Canadian silver miner, First Majestic Silver Corp., has decided to take the CFTC to task.

In a letter penned by Ted Butler to CFTC Chairman Tim Massad (who recently replaced former Goldmanite and future US Treasury Secretary, Gary Gensler), Keith Neumeyer, CEO of First Majestic, became the first primary silver producer to vocally highlight some of the questionable activity reported weekly in the CFTC's Commitment of Traders report, specifically the "record position change of more than 28,200 net contracts of COMEX silver futures" the equivalent of 141 million ounces of silver and 61 days of world mine production. Incidentally, this was first observed here one week ago.

Neumeyer observes accurately that the "big changes in positions on the COMEX are by speculators and commercials acting as speculators and not by those engaged in bona fide hedging" and comments that "such massive speculation in COMEX silver futures may not be in keeping with the spirit and intent of commodity law and may suggest something is wrong with the price discovery process, since real producers and consumers of silver don't appear to be represented."

While we salute First Majestic with this first public appeal by a corporation to the CFTC to stop the rigging in the silver market, we have absolute certainty that this too complaint will promptly end up in Mr. Massad trash never to be heard from again.

This Zero Hedge spin on Keith Neumeyer's letter to the CFTC was posted on their website at 3 p.m. yesterday afternoon.

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Gold Declines for Second Day as Investors Await U.S. Jobs Data

Gold dropped for a second day to trade near a three-week low before the release of monthly data on U.S. employment that will provide clues on the outlook for borrowing costs in the world’s largest economy. Silver declined.

Bullion for immediate delivery was 0.1 percent lower at $1,183.66 an ounce at 12:05 p.m. in Singapore, according to Bloomberg generic pricing. The metal declined as much as 1.1 percent to $1,179.65 on Wednesday, the lowest level since May 11. Prices in Shanghai fell to a one-month low.

Gold is little changed this year as investors pored over U.S. data for clues on when the Federal Reserve will raise interest rates for the first time since 2006. The report on Friday is expected to show a pickup in the jobs market after data on Wednesday showed companies added more workers in May from a month earlier. An expanding economy gives policy makers more room to raise rates, which curb gold’s appeal as it generally offers returns only through price gains.

Gold was “put under pressure after the release of improving U.S. economic data,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note.

This Bloomberg story from early yesterday evening MDT is the usual main stream bulls hit, as the gold price has nothing to do with "all of the above," as prices are set in the COMEX futures market between the bullion banks and their buddies on one side---and the Managed Money traders on the other.  I found it on the Sharps Pixley website in the wee hours of this morning EDT.

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Jun 03, 2015

Factory Orders Scream Recession, Drop 6% From Year Ago in Sixth Consecutive Drop

Following this morning's disappointing tumble in ISM New York (with 5 of the 6 components plunging), Factory Orders tumbled 0.4% MoM in April (against expectations of a modest 0.1% decline).

This comes after March's exuberance-inspiring upwardly revised 2.2% MoM surge (which ended a 7 month streak of MoM drops). Down 6.4% against 2014, this is the 6th month in a row of YoY declines in Factory Orders - something not seen previously outside of a recession. Stocks love this terrible news (for now).

This chart-filled Zero Hedge article was posted on their website at 10:03 a.m. EDT yesterday morning---and it's certainly worth a minute or so of your time.  I thank Dan Lazicki for today's first story.

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Roubini: 'Combination of Macro Liquidity, Market Illiquidity a Time Bomb'

While massive central bank easing has created huge pools of liquidity in the financial systems of developed economies in recent years, liquidity in their financial markets has shrunk, notes economist Nouriel Roubini of New York University.

And that paradox carries ominous implications, he writes in an article for Project Syndicate.

"Policy interest rates are near zero in most advanced economies, and the monetary base has soared. This has . . . lifted many asset prices," Roubini points out. The Federal Reserve's balance sheet now totals a whopping $4.5 trillion.

"And yet investors have reason to be concerned," he explains. Roubini cites the May 2010 "flash crash" for stocks and the October 2014 flash crash for Treasurys as examples.

"This combination of macro liquidity and market illiquidity is a time bomb," he warns.

This piece appeared on the newsmax.com website at 6:00 a.m. EDT yesterday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.

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New York Sun: Jeb Bush on the dollar and currency manipulation

We were just sitting down at the typewriter to tap out an editorial on the failure of any of the Republican contenders to address the crisis in respect of the dollar when an e-mail hit our screen from the editor of the Future of Capitalism about the remarks over the weekend by Jeb Bush. The former governor of Florida was making an appearance at WMUR television at New Hampshire when he was asked whether, as FoC characterized the question, “foreign currency manipulation had put American manufacturers at a disadvantage.

Mr. Bush responded that there might be some manipulation by foreigners. But, he added, “you can make a case that in the last few years, given our monetary policy, that we’ve been manipulating our currency. We’ve never had a time where our central bank is just printing money like nobody’s business. And that depreciates our currency. It lowers our interest rates and depreciates our currency.” Mr. Bush acknowledged that there exist some protections against foreign currency manipulation already and noted that an eventual trade pact may yet add more.

One swallow mightn’t make a spring, but it’s terrific to hear a potential presidential candidate — Mr. Bush seems to be moving in that direction, though he’s yet formally to declare — open up this issue. By our lights, monetary policy will be the most important economic question before the voters in 2016. We haven’t had a real donnybrook on the question since 1896, when William Jennings Bryan ran on a campaign of the free coinage of silver — meaning inflation — against William McKinley, who ran on the gold standard and won.

This interesting story showed up on The New York Sun website yesterday---and I found it in a GATA release.

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Dollar Flash-Crashes on Sudden EUR Spike Amid Carnage in Bunds

Driven by no immediate fundamental or news catalyst, EUR/USD is spiking (running stops to almost 1.1200) sending the USD index into yet another flash-crash this morning... as the carnage in bunds continues (+11bps to 65bps)...

USD Index is tumbling suddenly...driven by a spike above 1.1100 in EUR/USD... (highs at 1.1196! - 200 pips off lows).

This is another short, chart-filled Zero Hedge column from yesterday morning EDT---and it's worth a quick look as well.  It's the second offering of the day from Dan Lazicki.

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HSBC Preparing Job Cuts That May Target 20,000 Workers, Sky Says

HSBC Holdings Plc, Europe’s largest bank, will announce a plan next week to cut thousands of jobs, Sky News reported, citing unidentified people close to the matter.

Chief Executive Officer Stuart Gulliver will disclose a target when he updates shareholders on the bank’s strategy on June 9, laying out a reduction that will probably affect 10,000 to 20,000 people, according to Sky. The number is still being worked out, it cited one person as saying.

Heidi Ashley, a spokeswoman for HSBC in London, declined to comment on the report. The company employed almost 258,000 people at the end of last year.

Gulliver, 56, is striving to reduce costs and sell businesses to bolster earnings, while spending billions of dollars to boost internal compliance. The job-cutting target will exclude the potential impact of selling businesses in Brazil and Turkey, as well as the possible separation of HSBC’s U.K. arm to meet a requirement to separate the consumer and investment banking businesses, Sky said.

This news item appeared on the Bloomberg website early Monday afternoon MDT---and it's something I 'borrowed' from yesterday's edition of the King Report.

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E.U. regulators tell 11 countries to adopt bank bail-in rules

The European Commission on Thursday gave France, Italy and nine other EU countries two months to adopt new E.U. rules on propping up failed banks or face legal action.

The rules, known as the bank recovery and resolution directive (BRRD), seek to shield taxpayers from having to bail out troubled lenders, forcing creditors and shareholders to contribute to the rescue in a process known as "bail-in".

The Commission drafted the rules in response to the financial crisis which started in 2008, giving the 28 countries in the European Union until the end of last year to apply them.

It said Bulgaria, the Czech Republic, France, Italy, Lithuania, Luxembourg, the Netherlands, Malta, Poland, Romania and Sweden had yet to fall in line.

"If they don't comply within two months, the Commission may decide to refer them to the E.U. Court of Justice," the E.U. executive said in a statement, referring to Europe's highest court based in Luxembourg.

The above five paragraphs are all there is to this brief Reuters article that was filed from Brussels early last Thursday morning EDT.  The article is definitely worth reading---and I thank reader 'David in California' for his first of two contributions to today's column.

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Germany dominance over as demographic crunch worsens

Germany’s birth rate has collapsed to the lowest level in the world and its workforce will start plunging at a faster rate than Japan's by the early 2020s, seriously threatening the long-term viability of Europe’s leading economy.

A study by the World Economy Institute in Hamburg (HWWI) found that the average number of births per 1,000 population dropped to 8.2 over the five years from 2008 to 2013, further compounding a demographic crisis already in the pipeline. Even Japan did slightly better at 8.4.

“No other industrial country is deteriorating at this speed despite the strong influx of young migrant workers. Germany cannot continue to be a dynamic business hub in the long-run without a strong jobs market,” warned the institute.

The crunch is aggravated by the double effect of a powerful post-war baby boom followed by a countervailing baby bust – the so-called “Pillenknick”. The picture in Portugal (nine) and Italy (9.2) is almost as bad.

This very interesting, but not shocking Ambrose Evans-Pritchard commentary from Monday evening BST is definitely worth reading if you have the interest---and I thank Roy Stephens for sending it our way.

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Greece urges international creditors to be realistic

Greece has said it had sent a comprehensive reform proposal to its international creditors, urging them to be realistic and accept the plan to clinch a long delayed deal to release frozen aid before Athens runs out of cash.

The announcement by Prime Minister Alexis Tsipras came hours after leaders of Germany, France and the lending institutions held emergency talks on the Greek debt crisis in Berlin in a sign of top-level concern about the impasse.

It appeared to be an attempt to preempt a take-it-or-leave-it offer by the creditors and to show Greek voters that Athens, too, is putting forward proposals.

This Greece-related news item appeared on the Irish Times website at 2:01 p.m. BST on their Tuesday afternoon, which was 9:01 a.m. EDT---and it's the second offering in a row from Roy Stephens.

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Greek default draws closer as opposing sides swap ultimatums

Greece and its European creditors have both issued “last ditch” demands in their bail-out talks that appear incompatible, raising the stakes in an increasingly dangerous showdown.

The eurozone’s negotiators and the International Monetary Fund have been putting the finishing touches on what amounts to a package of take-it-or-leave-it conditions that offer scant leeway on Greece’s austerity or debt relief.

It is understood that the proposals offer no real concessions on Greece’s “red lines” on pensions and labour rights. The creditors have promised a degree of flexibility but continue to insist that the far-Left Syriza government comply with the chief sticking points of the old EU-IMF Troika”Memorandum”.

Alexis Tsipras, Greece’s prime minister, pre-empted the move by rushing through his own set of proposals, more or less conceding in advance that his plans will not be accepted by the technocrats.

This commentary by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 7:51 p.m. BST yesterday evening---and it's courtesy of Roy Stephens as well.

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Greece to invest $2 billion in Turkish Stream, will sign memorandum asap - Energy Minister

Greece plans to sign a document on political support for Gazprom’s Turkish Stream project at the St. Petersburg International Economic Forum in June, its Energy Minister announced on Monday. The country plans to invest $2 billion in its construction.

A memorandum on political support for the gas pipeline project will be prepared by June 18-20, when the International Economic Forum (SPIEF-2015) will be held in Russia’s St. Petersburg, Greek Energy Minister Panagiotis Lafazanis announced on Monday.

Right there we will try to sign an agreement, a so-called ‘memorandum’ on the political support of the said gas pipeline between Greece and Russia,” the minister said, as quoted by TASS. Greece “will be proactively drafting a document,” the official added.

Greece’s part of the pipeline, which will be delivering Russia’s gas on from the Turkish border, will cost some $2 billion, Lafazanis said in an interview with the Rossiya24 channel. The minister said that a Greek state company will be involved in the project, adding that there has been “big interest” from many companies wishing to take part in the construction and future operation of the pipeline.

This news item put in an appearance on the Russia Today website at 7:42 p.m. Moscow time on their Monday evening, which was 12:42 p.m. EDT in Washington.  I thank reader 'David in California' for passing it around yesterday.

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The South China Sea word war -- Pepe Escobar

As Cold War 2.0 between the U.S. and Russia remains far from being defused, the last thing the world needs is a reincarnation of Bushist hawk Donald “known unknowns” Rumsfeld.

Instead, the — predictable — “known known” we get is Pentagon supremo Ash Carter.

Neocon Ash threw quite a show at the Shangri-La Dialogue this past weekend in Singapore.

Beijing is engaged in reclamation work in nine artificial islands in the South China Sea; seven in the atolls of the Spratlys, and two others in the Paracel archipelago. Ash virtually ordered Beijing to put an “immediate and lasting halt” to the expansion; accused it of behaving “out of step” with international norms; and capped the show by flying over the Strait of Malacca out of Singapore in a V-22 Osprey.

Washington never ceases to remind the world that “freedom of navigation” in the Strait of Malacca – through which China imports a sea of energy – is guaranteed by the U.S. Navy.

This short essay by Pepe showed up on the Asia Times website yesterday---and certainly falls into the must read category for any serious student of the New Great Game.  It is, of course, courtesy of Roy Stephens.

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Anthem Vault, Inc. Raises $3.2 Million Ahead of HayekGold Launch: Liquid, Spendable, Digital Gold

Anthem Vault, Inc., a provider of retail gold and silver bullion and vaulting services, today announced that it has raised a combined $3.2 million — both a Founders' Seed Round of $1.6 million and matching Series A Financing of $1.6 million of its equity securities under Regulation D, Rule 506(c) from accredited investors in the pharmaceutical, healthcare, financial services, retail, datacenter, telecommunications, government and entertainment sectors - for the launch of HayekGold, a global open digital gold payment platform powered by the Bitcoin block chain.

Introduced on Memorial Day, HayekGold is a gold-backed digital currency with unparalleled stability and intrinsic value; each is backed by one gram of vaulted and insured gold bullion.

"Bitcoin was a trailblazer in the arena of global digital currency and HayekGold builds on that foundation," said Founder & CEO Anthem Hayek Blanchard. "Gold combined with a stable cryptocurrency forms a perfect union — a free, instant, secure and reliable payment system for goods and services anywhere in the world simply, swiftly and safely."

This gold-related news story appeared on the marketwatch.com Internet site at late Monday afternoon EDT---and I thank reader Dave Malek for sending it our way.

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U.S. Government Lost 7 Fort Knox Gold Audit Reports

Every year the gold in Fort Knox is ‘audited’ by checking the official joint seals that were placed on all vault compartments during the continuing audits of U.S.-owned gold from 1974 until 1986, when allegedly 97 % of the gold was inspected. However, a Freedom Of Information Act request I’ve submitted in order to obtain all audit reports could not be honored. Seven reports are missing.

From at least 1944 the world reserve currency is the US dollar, which was backed by gold until 1971 and supported by gold ever since. There can be no world reserve currency without appropriate gold reserves supporting it, providing essential confidence and credibility. The US official gold reserves are the world’s greatest by far at 8,134 metric tonnes. The fact that 7 audit reports that should grant the existence of these reserves appear to be missing is problematic.

At the congressional hearing of the Gold Transparency Act (H.R. 1495, not enacted) in 2011 the Inspector General (IG) of the Treasury presented a case ‘all is fine’, but all is not fine. And the problem goes far beyond missing audit reports. In a series of posts we’ll continue to examine all there is to find regarding the audits of US official gold reserves.

This very long commentary by Koos is the third in a series of reports on U.S. gold reserves.  It was posted on the bullionstar.com Internet site yesterday---and I must admit that I haven't had the time to read it yet.

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Here’s What the Next Gold Bull Market Will Look Like -- Jeff Clark, Casey Research

We measured every bull cycle of gold stocks and found there have been eight distinct upcycles since 1975.

We also discovered something exciting: Only one was less than a double. (A second was 99.9%.)

Even more enticing is that the biggest one—a 601.5% advance in the early 2000s—occurred just after a prolonged bear market---and our current bear market is longer than that one.

To get a sense for the potential upside, we applied the percentage gain from each of those upcycles to our recommended BIG GOLD picks.

Of course this bull market will only occur when JPMorgan et al allow it, or are over run.  But either way, it's coming---and only the timing is unknown.  This commentary by Jeff appeared on the Casey Research website yesterday.

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Swiss slammed for closing DRC 'dirty gold' case

Activists on Tuesday accused Swiss authorities of encouraging impunity, after prosecutors shut a case against a company suspected of laundering gold pillaged by armed groups in Democratic Republic of Congo.

The Swiss attorney general's office decided in March to close a case against Argor-Heraeus, which faced allegations of "complicity in war crimes and pillage" after it, refined three tonnes of gold ore pillaged from the conflict-torn country in 2004-2005.

In its ruling, which was quietly made public a month later, the prosecutor's office said there was not enough evidence that the Swiss firm, one of the world's largest processors of precious metals, was aware of the illegal origin of the gold.

The gold, believed to have been illegally mined by a group called the National Integrationist Front (FNI), was sold through a Uganda-based company and on to British Hussar Limited before reaching Argor.

This interesting news item, filed from Geneva, showed up on the South African Internet site news24.com yesterday at 12:32 p.m. SAST---South Africa Standard Time.  And it's fitting that South African reader B.V. sent it our way.

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Turkey gold imports slip to 10-month low

Turkey’s highest gold price in more than three years is cutting appetite for the metal in the fourth- biggest buyer.

The country imported 1.65 metric tons of bullion in May, 21 percent less than a month earlier and the least since July, the Istanbul Gold Exchange’s website showed on Tuesday. Turkish first-quarter consumer demand for bullion slid 42 percent from a year earlier, according to World Gold Council data.

Local prices rallied 21 percent in the past year as the lira weakened against the dollar. The currency’s slump is the second-biggest in emerging markets this year on concern government gridlock will prevent legislation needed to bolster the economy. Turkey will hold national elections on June 7 and polls suggest a coalition government will be elected.

“A decline in the Turkish lira has made it more expensive for people to buy gold,” Cagdas Kucukemiroglu, a consultant for researcher Metals Focus Ltd., said by phone from Istanbul on Tuesday. “This is the continuation of a trend, we have seen weak demand in the first quarter and we expected it to carry through to the second quarter.”

This Bloomberg article from yesterday found a home on the mineweb.com Internet site.

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Gold for No Money: Mandela, Zuma Heirs Await Fraud Ruling

Fifteen years after their relatives helped free South Africa from apartheid, scions of two of the nation’s most famous families met in a hotel overlooking the Indian Ocean to start a business together.

Zondwa Mandela and Khulubuse Zuma, accompanied by an entourage of friends and advisers, decided at the five-star Beverly Hills Hotel in Durban in March 2009 to set up a company that would take advantage of laws favoring black investors in mining. They didn’t put up any money.

Six years later, Nelson Mandela’s grandson and President Jacob Zuma’s nephew are fighting claims alleging fraud amounting to almost 2 billion rand ($164 million) in a civil case after gaining access to two mines near Johannesburg without paying for them. About 5,000 workers have lost their jobs, operations ceased five years ago, equipment has been sold for scrap -- and almost $10 million of gold is missing, court documents show.

Mandela and Zuma “are still enjoying luxurious lifestyles despite workers suffering with no food, water or electricity,” said Joseph Montisetse, a regional secretary for the National Union of Mineworkers. “They have tarnished the image of our political leaders.”

This long, but very interesting [and somewhat convoluted] story was posted on the Bloomberg Internet site late Monday afternoon Denver time---and I thank Elliot Simon for his second contribution to today's column.

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Traders may get cash-settled gold and silver futures on Indian commodity exchange

Domestic punters and hedgers in gold and silver futures might soon be able to play similar contracts that are traded on CME Group, the world's largest derivatives marketplace, but denominated in rupees on the Multi-Commodity Exchange (MCX), the country's largest commodity bourse, subject to regulatory approval.

Unlike existing gold and silver contracts that are compulsorily settled at the average of three days' spot price in Ahmedabad, the new contracts will be cash settled at the CME relevant rate multiplied by the rupee exchange rate, said two persons aware of the development. "This will be helpful to those who don't want delivery but just to hedge or speculate. Approval of Forward Markets Commission, or FMC, is awaited," they added.

On MCX the kilo gold contract is settled once in two months. The contract enters the delivery period on the first of the expiry month while delivery takes place on the fifth. However, once the contract enters delivery period, the margin to trade jumps to 25 per cent of open position, which is substantial, leading to many hedgers and punters simply rolling over their positions or squaring off pre-delivery. In the new contract, this might not be the case since it is cash-settled.

As interesting as this story may be, it's also irrelevant when it comes to India's physical demand, as futures trading such as this will have zero impact on the physical market, so they can trade away to their heart's content.  This news story appeared on The Times of India website at 2:31 a.m. IST on their Wednesday morning--and I found it on that gata.org Internet site.

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First Majestic Silver Puts the CFTC on Notice Regarding the Silver Price Management Scheme

In a letter crafted by silver analyst Ted Butler, First Majestic Silver Corp. President & CEO Keith Neumeyer became the first primary silver producer to put their marker down on the CME-condoned silver price management scheme by JPMorgan et al.

They may not dignify his request for action with the courtesy of a reply, but the fact that a miner has gone on the public record on this issue speaks volumes about Keith & Co. over at First Majestic.  I've been a shareholder for many years---and I'm delighted [as is Ted] that he had the courage to step up to the plate on this issue.

I know that Ted will have something to say about it in his mid-week column to his paying subscribers this afternoon.

The letter, in full, is a must read---and I urge you to send your personal thanks to Keith via their Investor Relations guru, Mr. Todd Anthony at  info@firstmajestic.com.

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Is gold demand/supply balance crunch already here? -- Lawrence Williams

The chart also shows the inexorable rise of China’s gold consumption to overtake India in 2013 as the world’s leading gold consumer – India had held this position for many years beforehand.  It can be seen how Indian imports fell away so sharply during 2013 when the then Indian government imposed significant gold import duties and introduced other measures to try and control the very substantial gold flows into the nation to counter the significant effects Indian gold imports had been having on its Current Account Deficit.  It may be seen though that since last year Indian gold imports have been beginning to pick up again despite the 10% import duty imposed.

Given that China and India are not the only net gold consuming nations – the World Gold Council suggests around 545 tonnes was consumed by other nations last year – and that some central banks, notably Russia and Kazakhstan, have been taking gold into their reserves month in, month out amounting to 477 tonnes last year and one may well ask where all this gold is coming from.  Scrap will account for most of this.  Overall, scrap supply last year was largely balanced out by the central bank purchases plus other nations’ demand.   But scrap supplies have been falling along with the gold price and if China and India keep on absorbing gold at the current rate. Then demand will be exceeding apparently available supply so where will this come from?  ETFs could be a source, but at the moment sales out of and purchases into these seem pretty much in balance.

Ed Steer in his Gold and Silver Daily newsletter says that any balance of global demand over supply must be coming out of Central Bank vaults as the only other available unaccounted-for source.  It is hard to disagree with this suggestion, but this would presumably be in leased gold which enables the banks to keep it in their books, although in reality the chance of this ever being repaid as bullion look increasingly slim, given the physical gold flows into firm eastern hands.

This commentary, plus embedded chart, certainly falls into the must read category---and it showed up on Lawrie's website yesterday.  Dan "The Man" Lazicki found it before I got to it---and I thank him for his final offering in today's column.

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